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Later this year, the Financial Services Commission (FSC) revealed that a few major organizations will be permitted to exchange virtual assets in South Korea. About 3,500 business groups, such as publicly traded companies, will take part in a pilot test. Many organizations have indicated interest in blockchain and cryptocurrency investments, which is why the FSC created this judgment.
The administration is aware of the dangers, though. Strict recommendations will be put in place for banks and virtual asset exchanges to secure the market. Before enabling companies to open trade accounts, they will perform a thorough investigation.
Institutional Participation Risks
The Financial Services Commission (FSC) of South Korea revealed on February 13 that beginning in the second half of the year, essential institutional investors will be enabled to open virtual asset trading accounts. Approximately 3,500 business entities, such as listed businesses, will be "subject to the pilot test" based on the commission.
The FSC claimed in a statement that it has authorized permitting institutional investors, or so-called certified investors, to participate in crypto currency since they have indicated a strong desire to find a blockchain-related organization. The FSC said that it took this action to ensure South Korea doesn't fall behind other countries that are adopting virtual assets, in addition to the increasing demand.
The Korean regulator does agree, though, that there will always be risks that caused with greater business participation. It reported that measures to enhance protections in order to make the virtual asset market ready for this will be performed.
Guidelines for Virtual Asset Trading
Based on the portion of the FSC statement, "a set of transaction instructions will be prepared to offer proper information for banks to improve verification of the purpose of transactions and the origin of funds, for virtual asset exchanges to employ third-party custody and management services, and to boost information disclosures made available to investors."
Institutions wishing to start virtual asset trading accounts will require to be carefully screened by banks and virtual asset exchanges. The FSC claimed that to avoid any risk contagion into the more significant financial system, its virtual asset committee suggested that financial organizations be initially excluded.
According to the FSC, a decision on companies that cannot be considered competent investors will only be decided after an assessment of the virtual asset market and the growth of the pilot test, among other requirements.
